I understand you can’t do it all as an entrepreneur. So it’s understandable and I even recommend leaning on professionals—accountants, bookkeepers, fractional CFOs—to handle the financial side of things. But as a CPA, I’ve seen too many cases where not all of these so-called experts are as competent as they claim to be. Whether it’s misreading financial statements, overlooking obvious errors, or providing bad advice, the consequences of trusting the wrong professional can be devastating.
The Moment I Realized Something Was Wrong
One of my clients relies on me for both business and personal tax returns. Although I’m a business coach and fractional CFO, I don’t have that direct role with this client. My responsibility is clear: I handle the taxes, while a bookkeeper prepares the financial statements. Every tax season, I review these statements to ensure accuracy and identify any missed deductions or tax-saving opportunities.
This year, as soon as I opened the balance sheet, I knew something was off. I didn’t even have to dig into the details—the numbers just didn’t add up. It was a clear red flag that something had gone seriously wrong without even needing a detailed analysis.
I immediately reached out to my client, pointing out the issues and suggesting they double-check with their bookkeeper. I even asked if maybe the documents were still being finalized. After a couple of days, my client replied: “I spoke with both my bookkeeper and my fractional CFO, and they said everything looks fine.”
I couldn’t believe it. How could a “fractional CFO” miss such an obvious mistake? I went back to my client, reminding them that, at the end of the day, they are responsible for their tax filings. While I could still prepare the return based on the information provided, I made it clear they were taking a risk. To help clarify, I sent over a detailed independent resource showing exactly why the balance sheet was wrong.
A few days later, my client reached out again, admitting I was right. Both the bookkeeper and the fractional CFO had missed the errors. After some back-and-forth, the statements were corrected and sent back to me. But it left me wondering—how could a supposed expert overlook such basic issues, even after being alerted?
Red Flags to Watch For
This experience highlights some clear warning signs that every business owner should be aware of when working with a fractional CFO or financial professional:
Inconsistent or Misaligned Financial Statements: If your balance sheet or other financial reports don’t make sense or contradict what you know about your business, it’s a major red flag.
Poor Communication: If your CFO dismisses your questions, avoids explaining things, or can’t break down complex information into simple terms, they may be hiding incompetence.
Missed Deadlines: Regular delays in delivering financial reports indicate disorganization that could hurt your business.
Lack of Proactivity: A competent CFO should offer insights and advice without being asked. If they’re not providing strategic input, they might not fully understand the data.
Overconfidence Despite Errors: If they ignore obvious mistakes or brush off your concerns, it’s time to question their expertise.
How to Protect Your Business
If you find yourself in a similar situation, here are some steps to protect your business from further damage:
Get an Independent Review: Have a third-party financial expert audit your statements to verify their accuracy and spot any red flags.
Have a Conversation: Bring up your concerns directly with your CFO or bookkeeper and ask for specific explanations of the errors.
Create an Action Plan: Work together on a strategy to correct the mistakes and ensure future reporting is accurate and timely.
Consider Replacing Them: If the issues persist, don’t hesitate to find a new, qualified financial professional who can handle your business needs properly.
Educate Yourself: Understanding the basics of financial reports can help you identify problems early and ask the right questions.
Consult a Trusted Advisor: If the damage is significant, working with a trusted CPA or business coach can help you correct course and make better decisions moving forward.
The Bigger Picture and Stunted Growth
Having accurate financial statements isn’t just about taxes—it’s about the overall health and future of your business. When your numbers are wrong, it affects every aspect of decision-making, from missed tax deductions to misguided strategic planning. Inaccurate data can lead to poor decisions that stunt your business’s growth.
Your financials are the backbone of your business. If you can’t trust your fractional CFO or bookkeeper to provide reliable information, it can negatively affect everything from securing loans to attracting investors and scaling for success.
This story is a reminder to choose your financial partners wisely. If you or someone you know needs a fractional CFO who can truly analyze and interpret financial data to help drive strategic decisions, I can help.
Don’t let someone else’s incompetence put your business at risk. Reach out if you need guidance—your financial health is too important to leave in the wrong hands.
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